Financial Toolbox™

mirr - Modified internal rate of return

Syntax

Return = mirr(CashFlow, FinRate, Reinvest)

Arguments

`CashFlow`	Vector of cash flows. The first entry is the initial investment.
`FinRate`	Finance rate for negative cash flow values. Enter as a decimal fraction.
`Reinvest`	Reinvestment rate for positive cash flow values, as a decimal fraction.

Description

Return = mirr(CashFlow, FinRate, Reinvest) calculates the modified internal rate of return for a series of periodic cash flows. This function calculates only positive rates of return; for nonpositive rates of return, Return = 0.

Examples

This cash flow represents the yearly income from an initial investment of $100,000. The finance rate is 9% and the reinvestment rate is 12%.

Year 1	$20,000
Year 2	($10,000)
Year 3	$30,000
Year 4	$38,000
Year 5	$50,000

To calculate the modified internal rate of return on the investment

Return = mirr([-100000 20000 -10000 30000 38000 50000], 0.09,... 
0.12)

returns

Return =
         0.0832 (8.32%)

References